Impact Of #Regulations in the #Crypto and #Blockchain #World and to the digital transformation process

Welcome back dear reader. Today we gonna talk about regulations and why they a big reason that the crypto and defi markets get in trouble and how this will effect the whole digital transformation process. In the past years a lot of reports have been published about crime and most of them driven by emotions of the writers motion. For example the reports of #chainanalysis show a different picture from others. I contributed to a main study called "Impact Of Crypto Currency Adoption On Governments" which started in 2020 and finished by publishing to government officials in 2021 through our Global Blockchain Association also for members. Since then I followed the ongoing field. Actually there is only 0.2% of all crimes addicted to the crypto and blockchain space.

Regarding this facts it is astonishing how afraid regulators all over the world act, if the topic Bitcoin & Co will be discussed. Most of this discussion driven by emotional reassessments without another reason than fear. Why ? With the invention of #Bitcoin the first truly decentralized digital world become reality. Still today Bitcoin is only regulated, if you use your Bitcoins in a way you allow everyone recognize you. With infinity Bitcoin addresses (which can infinitely changed from the user) there are a 2 worlds actually. The world of crypto user and the world of crypto trades. Same is the DeFi market and everything else.

The 3rd party in all of this steps into with a brutal force which kills nears any invention and led into a situation which on one hand is deadly for traders but on the other side, as a positive side effect, brings Bitcoin back to his real value. Sounds strange to you ? Well let us go deeper in.

Genesis Claims $5.1B in Liabilities in First-Day Bankruptcy Filing

Three of the institutional crypto brokerage's entities filed for Chapter 11 protection late Thursday.

YES YOU READ RIGHT --> CENTRALIZED EXCHANGES !

What happened to #genesis #gemini #ftx #dcg #digitalcurrencygroup #celsius #holdco is the end of the centralized exchanges. Oh of course they all praised the decentralized factor but...

What is a technical decentralized exchange worth in security if it is centralized by entity ownership ? Nothing !

Let me explain to those of you who not firm with this. When we talk about decentralization we talk in reality about distribution. Let us make a simple comparing. All of you know NETFLIX. It has a lot of different channels and options how you can access. Every channel has an own team from directors, executives, producer, alignments and association.

Every director of a channel is a distributed node. Like in Ethereum. From this nodes further connection are made. This is like the branches of a tree. Every branch of a tree is connected to the tree trunk. And this trunk is the main source of informations and controls the rest. A studio for Netflix can be in every big city in the world and then you say "hey it is decentralized" ignoring the fact that this studios also controlled by the Netflix group.

Every exchange has an entity (except a few really decentralized not distributed without entity). So we can say even #defi markets almost 99% centralized

And this makes the world of #exchanges and #trading places so vulnerable to #regulations

A long time regulators tried to understand how they can get an impact on the people who use #bitcoin and #cryptocurrencies and to those who run exchanges and market places. In 2014 I wrote an well recognized article and gave an interview about the freedom in the future and that the #fintech industry will lead governments and regulators into this field trying to stop the movement of independent "money" for everyone and every business.

And yes, it works for them and Bitcoin became the only not controllable item. There are two key factors making this happen:

• Creating greediness for the normal people and investors (Fear Of Missing Out)
• Connecting the digital currency and token world to the fiat system by law

Greed is naturally and people willed to give their personal datas into hands of everyone if they expect a business which promises to become rich. They will accept every regulation.

On the other hand exchanges make a lot of money from trades (ETF, Futures) and of course from fees. They underestimated the power what it means connecting assets to fiat as a rule to protect customer funds. Every exchange must cover their assets fully with #fiat. If an exchange holds 100.000 in assets of crypto and tokens it must underlined with the same amount of fiat currencies or secured through assets outside. Otherwise the exchange will lose their license.

To fundraise and secure money from investors exchanges creates securities in form of digital assets called token. These tokens are called "security token" or the more common wording "stable coins". However these are pegged exactly to 1 Dollar. But why should I go this way instead of pegging everything directly to a dollar in value ?

Imagine the price of a Bitcoin surges from 20000 to 40000. This means you have to double the fiat money behind. But it is not easy to get money fast. With tokens and stable coins it is easy selling this against investors and exchange this as a sign of trust. So investors can sell back these tokens to you or release their stable coins. A nice effect is, if for example Bitcoins fell under the price you bought the security you do not have losses, because the exchange has to pay the price tighten to at the the time you invest by buying them.

NOW THE DEVIL IS IN THE HOUSE

From a emotional point it makes sense creating a "gold standard" to secure the value. But for a logical point this is ridiculous. Why ? Because who is securing the price of gold ? You know what, if this securities are used to build the ground and a Bitcoin can not fell beneath this ... It has a stable bottom and can grow in never ending regions, because the covering of a 1:1 stability builds the whole sum of the object and therefor the minimum price. Compare with an auction. Who is building the start price? You can't bet under this price.

And at least if Gold is that stable why not using #gold for exchange instead of tethered fiat ? Because everything is based on markets today. And there is the big mistake. If the value of a security token or stable coin decrease you are in a trap. And exactly that happens. But likely you will ask me "Hey Joerg, but then the fiat is there to cover". And this is the big illusion. Because of the volatility created from exchanges and futures etc. an exchange itself has to circulate money, assets and securities around the customers. For example. The Bitcoin price decrease a lot of people exchange their stables. Means the exchange has to give fiat money away. But in a world economy crises as we see a dollar is not valued a dollar any more or actually euro and even british pound felt behind Dollar. This creates chaos to the security token and stable coin because it is not tethered 1 Dollar for 1 Dollar in satoshis (compared to Bitcoin 100.000.000 Satoshi's equal 1 Bitcoin). Now it is 1 Dollar for 80 dollarcent in Satoshis or eurocent. Means you need more securities to cover 1 Dollar. And now you are undervalued and the SEC for instant in America kills your business or you have to file bankruptcy. What happen is also if the trades explode and stop losses of empty trades failed and bitcoin grows unexpected. Now people will buy Bitcoins on masses to jump on the trend on the other side people will lose their bets and have to sell Bitcoins to the exchange fulfilling the empty trades. There is a run starting. But how will you keep up paying interest and loan to lenders and employees ?

Crypto lending companies got even more in trouble because the lender does not return the loan because he expect that you are bankrupt - because he follow the markets and your coverage. All of this led to the reason of the big fail of exchanges.

But you know what ? We had this all before. Lehman Brothers and the real estate bubble in America have been the same mechanic with penny stocks and more tethered. The big short of empty trades ended this story.

Why regulators did not act in the right way ?

After the big short the financial world in stock market trades have been full controlled now by state enforcement and administration. Everything is reported and there is nothing "under the hood" we can tune. You saw how powerful this works when some nice people from RobinHood does the same do with share from GameStop like the big hedges have done. The hedges lost millions and the controllers said we have to stop trading GameStop shares on the main markets. -----> Did you ever see this on exchanges in the crypto and defi world ?

Who protects big investors losing all their money in the two big bubbles actually (AI and Metaverse). Yes thats real products but overhyped (AI is actually machine learning and Metaverse is Internet of Things) There is no control

And thats the reason why the markets lose everything because they all pegged to debts fixing the up and downs. They can't pay back the customers because law says lender get money first. Instead of keeping business running they stop business and toke the rest of money to pay off the filers (Crypto lending firm Genesis held $5.1 billion in liabilities in the weeks following its freeze on withdrawals last November, according to bankruptcy court documents signed by interim CEO Derar Islim.)

KILLING THE FUTURE OF INVESTS AND INVENTIONS WITH #mica REGULATIONS invented by International Association for Trusted Blockchain Applications #inatba

The following words you should ACCEPT AS A FORM OF CRITIC AND THE FIGHT AGAINST PEOPLE WHO HAVEN'T GOT ANY IDEA ABOUT BITCOIN ECONOMY. BECAUSE THEY SITTING ON THEIR HIGH ROSSES OF SO CALLED "KNOWLEDGE" AND RESISTENT AGAINST ANY KIND OF HELPING TO UNDERSTAND AND CREATE REGUALTIONS IN THE RIGHT WAY. NOW THEY DAMAGED THE WHOLE NEW ECONOMY AND TECHNOLOGY SCENERY AND PREVENT FIGHTING POVERTY AND OTHER ISSUES OF THE OLD WORLD ECONOMY

WHY ? I like this topic because we see how 28 (now 27 after #brexit) signed the biggest mess in regulation of digital assets and inventions ever. And thats for a reason. After mica will go live (the decision has been delayed to 2023, April) we live in a unified token world the next step to kill fiat cash (Hey Joerg, stop at some point. #europeancommission claimed not to kill fiat -->think about when in history could you count on states like that ? It is like the granted says "our trainer is the best we never will change him") Control of money flow ends the world we know in cash. Why is Mica and similar regulations around the world that big mistake?

• First we want to create a world digital economy but people who do not want to general tokenize the tokens they got from assets in parts outside europe willed to do it now. They will leave the european markets.
• Dark Market Places will boom because if every asset except Bitcoin has to be recognized as a licensed token you will only work with not associated coins and tokens like Monero, Bitcoin. Because you can't address entities to follow the rules in this coins.
• Customers will be sperated from business. This rules of Mica making out of any exchange an entity will lead a lot of business into hidden markets or leaving europe.

Through 400 pages MICA got a regulation form which protects corruption from Government via new technologies like #blockchain and #dlt and #smartcontract

Yes even smart contracts have to have a final approval stamp of authorities before they can be embedded into a system. This will kill all ideas of creating a governmental #DAO or sovereignty of independent groups. Think about the access from #indigo groups. They forever excluded. Mica on the other hand doesn't prevent #moneylaundering there is no #aml in this.

Why ? Because the completely tracking of assets and cryptocurrencies changing them into an approved token will lead more people into alternative systems like bitcoin or offshore asset management. The country of El Salvador will see a heavenly run. And they are preparing for this, because they understand. #biden new regulations

THE TAX TRAP OF THE UNITED STATES - CRYPTO USERS SHOULD BLEED

U.S. President Joe Biden today submitted his?budget proposal?for the 2023 fiscal year in conjunction with the U.S. Treasury Department's?revenue explanations. By the administration's estimate, the U.S. can gather roughly $11 billion in revenue over 10 years—and nearly $5 billion next year alone—by "moderniz[ing] rules" to apply certain financial accounting and reporting practices to digital assets.

The Biden Administration projects $6.6 billion in revenue between the 2023 and 2032 tax years from applying mark-to-market rules to "actively traded" cryptocurrencies. Mark to market is a way of appraising the value of assets that takes into account current market conditions; it stands in contrast to using the purchase price of an asset, which may be higher or lower than its fair market value. In short, it's a way of taxing unrealized gains, which means the taxpayer is on the hook when ETH goes from $3,000 to $4,000—even if she doesn't sell. The global nature of the digital asset market offers opportunities for U.S. taxpayers to conceal assets and taxable income by using offshore digital asset exchanges and wallet providers," says the Treasury. It thinks it can collect $2.2 billion over the next decade by tightening this reporting requirement.

IF YOU ARE UNDERSTANDING BITCOIN FOR FIGHTING PROBLEMS IN THE WORLD AND USE IT TO BANK UNBANKED PEOPLE THEY HAVE TO PAY FOR THOSE WHO CRASHED OUR OLD ECONOMY REPEATLY !

And what happen if you gain losses because after paying tax for an increase of $2000 the price is $2500 Dollar less. You can't recover this losses the next years. What happen is #biden acts as an interfering interest point. Like if you send a ship with goods from Nigeria you have to pay people who otherwise will block leaving the harbor because they want blackmail some money for you. And all of this the government is doing because it will "protect" you from illegal activities of exchanges...

And this affects all customer around the globe. Lastly, the administration wants U.S. banks and financial institutions to share information with the Internal Revenue Service about the value of holdings from non-residents and foreign owners of certain business entities. This impacts citizens and residents as well, according to Treasury, who "attempt to avoid U.S. tax reporting by creating entities through which they can act."?

THE RAISE OF BITCOIN - REGULATIONS PUSH WHAT ECON'OMY DID NOT

Many of you surely doesn't understand that #CBDC will be connected to trace tax payments and everything. Once you have #tokenized a cryptocurrency or a other token into an approved item it could be connected to a ledger which is recording CDBC as a collateral. By sending these CBDC easily every administration and prosecuter in the world will be able to see in seconds where you have been and what you paid for and have been paid for... you never will see cbdc but in the US they try to replace cash with them instead like the #europeancouncil plans to go the hidden way let cbdc work behind the scenes. All ot the upcoming regulation will force people to save their privacy. The younger generation actually do not care and only see the "fishing aspects" trapping in. But they will grow and recognize sooner or later. On the other hand we have a bunch full of hacker who will outshow how to stop economy from working. Don't mind me wrong. It's about ethical hacks - keeping the balance between necessary tracking and fully control of people.

Bitcoin actually surges by the lost of exchanges and more because regulations come in - so ask yourself what are you willed to price in for an item of exchange which guarantees a free world ?